South Korea has climbed to the third highest position among the Organization for Economic Cooperation and Development (OECD) countries in terms of the proportion of corporate taxes to the Gross Domestic Product (GDP), marking the highest level in the last 50 years.
According to the report “Current Status and Implications of Corporate Tax Burden in Our Country” released by the Korea Enterprises Federation (KEF) on Feb. 15, the share of corporate taxes in South Korea’s GDP in 2022 was recorded at 5.4%. The corporate tax-to-GDP ratio, which decreased from 4.3% in 2019 to 3.4% in 2020, surged over the next two years, exceeding 5% for the first time in 2022.
This is the highest since the OECD began providing related statistics in 1972. Among 36 OECD countries, South Korea ranks third after Norway (18.8%) and Chile (5.7%). The OECD average is 3.8%, with the average of the Group of Seven (G7) major economies being 3.1%.
Furthermore, the proportion of corporate taxes in total tax revenue stood at 16.8%, the highest level since 1972. Among the 35 OECD countries, excluding Australia, Greece, and Japan, which did not provide data, South Korea ranks sixth. The averages for the OECD and the G7 are 11.7% and 7.9%, respectively, indicating that the contribution of companies to national finance and economic management is higher in South Korea than in other developed countries.
The nominal corporate tax rate in South Korea in 2022 was 27.5% (including local taxes), ranking tenth in the OECD. This rate is 3.9 percentage points higher than the OECD average of 23.6%. In comparison, the rate was 30.8% in 2000, which was lower than the OECD average of 32.3% at that time.
The Korea Enterprises Federation expressed the viewpoint that “South Korea bears a relatively larger corporate tax burden.” It highlighted that among the three major tax categories -- personal income tax (32.5%), corporate tax (26.2%), and value-added tax (20.6%) -- the corporate tax burden alone ranks among the highest in the OECD.